The Saudi Connection
How billions in oil money spawned a global terror network
The fact that the movement was based on Islam made it more difficult to discuss. "There was a fear that it was too sensitive, that you'd be accused of discrimination," Probst says. "It was political correctness run amok." Others say the message was subtle but clear. In the CIA, merely getting permission to prepare a report on a subject can require up to five levels of approval. On the subject of Saudi ties to terrorism, the word came back: There was simply no interest. The result, says a CIA veteran, was "a virtual embargo."
The FBI fared little better. By 1998, a sprawling investigation in Chicago into terrorist fundraising had led federal agents to $1.2 million looted from a local chemical firm. The money, they suspected, had been sent to Hamas. The G-men found the source of the cash curious: a Saudi charity, the IIRO, which had funneled the money through the Saudi Embassy. Senior Justice Department officials expressed concerns about "national security," and the case, eventually, was dropped. "Did someone say to me we can't do this because it would offend the Saudis? No," says Mark Flessner, a prosecutor on the case. "But was that always an undertone? Yes. Was that a huge issue? Yes."
It didn't hurt that the Saudis had spread money around Washington by the millions. Vast sums from Saudi contracts have bought friends and influence here. In his recent book Sleeping With the Devil: How Washington Sold Our Soul for Saudi Crude, former CIA operative Bob Baer calls it "Washington's 401(k) Plan." "The Saudis put out the message," Baer wrote. "You play the game--keep your mouth shut about the kingdom--and we'll take care of you." The list of beneficiaries is impressive: former cabinet secretaries, ambassadors, and CIA station chiefs. Washington lobbyists, P.R. firms, and lawyers have also supped at the Saudi table, as have nonprofits from the Kennedy Center to presidential libraries. The high-flying Carlyle Group has made fortunes doing deals with the Saudis. Among Carlyle's top advisers have been former President George H.W. Bush; James Baker, his secretary of state; and Frank Carlucci, a former secretary of defense. If that wasn't enough, there was the staggering amount of Saudi investment in America--as much as $600 billion in U.S. banks and stock markets.
That kind of clout may help explain why the House of Saud could be so dismissive of American concerns on terrorism. Official inquiries about bin Laden went unanswered by Riyadh. When Hezbollah terrorists killed 19 U.S. troops with a massive truck bomb at Khobar Towers in Dhahran in 1996, Saudi officials stonewalled, then shut the FBI out of the investigation. So sensitive were relations that the CIA instructed officials at its Riyadh station not to collect intelligence on Islamic extremists--even after the bombing--for fear of upsetting their host, former officers tell U.S. News.
Payoffs. The attacks on the U.S. embassies in Kenya and Tanzania in August 1998 changed all that. Within weeks, the NSC formed its task force on terrorist finances, drawing in members from the Treasury Department and the CIA's Illicit Transactions Group. (The ITG was later absorbed into the agency's Counterterrorism Center.) In the movies, U.S. intelligence often seems capable of extraordinary feats. In the real world, alas, Washington's reach is all too limited. Officials on the task force were quickly sobered by the handful of people they found with true expertise on the Middle East. Those knowledgeable about terrorist financing numbered even fewer. So limited was the CIA's knowledge that it began using al Qaeda's real name only that year--10 years after bin Laden founded the organization. Even less was known about al Qaeda's fellow jihadists around the globe. Its top ally in Southeast Asia, Jemmah Islamiya, was not targeted until after 9/11, according to an Australian intelligence report.